Introduction

Free Software — especially the GNU/Linux operating system — and the
FSF Europe have recently become more visible on the political
agenda. This article will seek to explain some of the larger economic,
social and political benefits that Free Software offers the European
countries and Europe as a whole. It will also give an insight into the
work of the FSF Europe.

As a concept and paradigm, Free Software addresses some of the most
fundamental needs of any society in its development towards the
post-industrial information era. The most visible organisation in this
field, the Free Software Foundation (FSF), was founded in 1985, a time
when people had barely begun grasping the most basic principles of
information technology.

With the first formal definition of Free Software and the creation of
the GNU General Public License (GPL) and GNU Lesser General Public
License (LGPL), the FSF not only created (and still maintains) the two
most popular licenses for Free Software in use today, but also
invented the notion of "Copyleft," referring to Free Software protected
against being stripped of its freedom.

Free Software itself is defined by four basic freedoms. The first
freedom — sometimes referred to as freedom 0 — is the unlimited use
of a program for any purpose. This means that a Free Software license
must allow use for all commercial or non-commercial applications in
order to fulfill this criterion.

The second freedom — freedom 1 in the Free Software definition [1] —
is the freedom to study a program to learn how it works and to adapt
it to your own needs. The remaining two freedoms are the freedoms to
redistribute unmodified copies and the freedom to release modified
copies that improve the state of the art.

As these are freedoms, people are free to choose to exercise one or
several of them, but they may also choose to exercise none.

Licenses providing these freedoms are referred to as Free Software
licenses. [2] A special case of Free Software license, the so-called
"Copyleft" license, has already been mentioned above. These licenses
give any user the freedoms described above, but they explicitly forbid
a distributor to remove that freedom, which would make recipients of
such freedom-deprived software dependent on that specific distributor.

Since access to the source code is a necessity to exercise these
freedoms for programming languages with distinct source code, some
people suggested using "Open Source" as a marketing term for Free
Software in 1998; nowadays Free Software is sometimes referred to
under this marketing term.

The good intention of making Free Software more widely known has
unfortunately had the unexpected side effect of weakening the
distinction between Free and proprietary/non-free software. [3]
Therefore the Free Software Foundation strongly recommends speaking
about Free Software or the adequate term in the local language; as
will be done in the remainder of this article.

Economic perspectives of Free Software

Despite the attempts of proprietary software vendors — especially
those located in the United States holding a monopoly in their
respective areas — to make it seem so, Free Software is not an attack
directed at specific companies.

Free Software should be understood as a new paradigm, a new model of
dealing with software based upon mature concepts. It is a model based
upon keeping the markets open and freely accessible; as such it cannot
be an attack on specific companies, since any company can participate
in this new market.

In a Free Software economy, there will be market leaders, but the
possibility of uncontrollable monopolies is much lower.

To current monopolies this may seem threatening. But as one of the
most important — maybe even the most important — problems of the
European IT industry is its dependence on foreign IT monopolies,
weakening these monopolies has become necessary for Europe to prosper.

That current monopolistic situation is a logical consequence of the
proprietary software model, which has a strong system-inherent
tendency towards proprietary software. The reason being that proprietary
software tends to only work properly with itself.

With such proprietary software, communication between two users
requires that both use the same software. Given that all people in
western countries supposedly know each other over no more than five
others, this leads to a kind of "viral" effect, where one user forces
the next to use the same software, creating a monopoly.

In theory, open standards would provide a way out of this vendor
lock-in, but history has shown that no open standard was ever truly
successful unless it was implemented in Free Software.

The possibility to enlarge and lock-in a user base by modification of
an open standard — a process euphemistically described as "improving"
a standard — that in consequence allows only migrating to a certain
piece of software, but not away from it, has proven to be too much of
a temptation for the major players in the field.

As the past has proven, it is ineffective to impose open standards on
vendors of proprietary software because of the fast-paced development
in this sector in combination with the intransparency of proprietary
software and the comparably slow workings of the political decision
process.

That is if the vendors accept such measures and do not excert their
monopoly-based clout to stop such actions altogether, as recent
anti-trust cases in the United States have shown.

Structure of a Free Software economy

The differences are much smaller than many people would make you
believe. The financially most important sector today is software for
business activities and most of the revenue is generated through
service. This is unlikely to change.

It is true that license revenue will most likely go down, probably
significantly. However this only affects a very small part of the
software generated revenue; a part which generates a negative trade
balance between Europe and the United States today.

The by orders of magnitude largest source of revenue today is service.
This sector will be able to grow significantly in a Free Software
economy.

In the current system, dominated by proprietary software, only those
companies supported by the monopolies can offer services; usually only
a small part of what would be possible. The remainder is either done
by the monopolies themselves — generating another stream of revenue
flowing out of Europe — or not at all.

Free Software offers greater independence of European businesses,
allowing them to offer the full array of services if they wish or
cooperate with others if this seems economically more useful.

Also they will be able to provide solutions for those services that
are already in demand, or that they can create a demand for, which are
currently impossible because businesses lack adequate access and
control over the software these services depend on.

In a Free Software economy, the current revenue in the service sector
will be redistributed more in favor of the European vendors and the
sector as a whole can be expected to grow.

Reducing dependencies

It also must be considered that currently the holders of monopolies
have control over the European IT industry as they could drive most
companies out of business by denying them access to their monopoly or
by making access so difficult that the economics of the situation will
possibly drive the company out of business.

To further worsen the situation, software monopolies can effectively
be coupled with hardware monopolies. So a piece of monopolistic
software will run only on a special kind of hardware and in return the
vendor(s) of that hardware will only deliver their machines with this
particular software.

The Free Software paradigm does not allow building this kind of
coupled monopoly. In fact Free Software encourages platform
independence and the Free Software systems (e.g. GNU/Linux and the BSD
systems) run on more hardware platforms than any proprietary operating
system.

Because the freedom to modify allows adding support for other hardware
platforms, Free Software provides a stable fundament for innovative
hardware initiatives that might even start on a local or regional
level.

That way Free Software not only brings back competition into the
software, but also furthers it in the hardware field.

National Economy

Because the largest part of software development is putting together
old and well-known principles, these get reimplemented at least once
by every company, sometimes even once for every project.

Free Software allows building upon these old and well-known building
blocks, consequently reducing the market-entry barrier for new and
innovative companies.

Also, the software industry is only one part of economy as a whole. As
software is the glue that ties together a digitally networked economy,
all sectors pay the price for the inefficiency of the proprietary
software model.

Today, most non-IT companies use proprietary solutions. This makes
them relying entirely on their vendors for crucial aspects of their
own economic activity such as keeping stocks, writing and paying bills
or communication with their customers, suppliers and/or competitors.

Forced updates are one result, the need to sometimes replace a whole
IT solution, downtimes and new training of employees included, is
another. Solutions based upon Free Software remove this dependency
almost entirely.

As the company gains the freedoms described above, updates can be made
according to the economic situation of the company. In case of
problems with the vendor, the solution will still remain usable and
another vendor can be found.

In the latter case, an investment for the new vendor to work itself
into the solution is required, but that cost is significantly lower
than the cost of an entirely new solution. Also the indirect costs in
terms of customer dissatisfaction, training of employees and downtimes
usually do not arise.

It can be expected that these effects will help revitalising economy
as a whole. In essence, Europe can only win economically by furthering
massive deployment of Free Software.

Social issues

Access to software becomes increasingly important to participate in
the cultural, social and economic exchange of mankind. For the
individual this means that access to software determines ones ability
to communicate, to study and to work. Studies from the United States
indicate that the average person interacts about 150 times each day
with software.

In consequence, software has to be understood as a form of cultural
property, a cultural technique. As long as mankind exists, new
cultural techniques have risen the question of who is given access to
them. Free Software ensures all people retain equal access to the
cultural property that software has become.

In terms of data security and protection, another issue arises. As
computers are always opaque — it is not possible to tell by
mechanical observation what a computer does — it becomes even more
important that the software is entirely transparent. Otherwise people
lose the ability to determine what their computers do and consequently
have no control over their personal or other data.

Free Software is by nature entirely transparent, preserving the
maximum of informational self-determination.

2001: The Free Software Foundation Europe

Networks tend to be more stable than single nodes and Europe is one of
the leading — if not the leading — regions for Free Software. So in
2001, the Free Software Foundation Europe (FSF Europe) was founded as
a sister organisation of the Free Software Foundation in North
America. Legally, financially and personally independent of each
other, they are working together on all aspects of Free Software in a
spirit of equal cooperation.

The FSF Europe itself encompasses the vision of a strong Europe united
in cooperation and mutual understanding with currently four countries
(France, Germany, Italy, Sweden) fully represented, three others
associated (UK, Portugal, Austria) and several others involved through
regular cooperation.

A main function of the FSF Europe is providing a European competence
center for Free Software, offering advice to governments, commissions,
companies, journalists and others.

In the scope of these activities, the FSF Europe was invited to
provide an expert for the Commission on Intellectual Property Rights
in London [4] and presented Free Software at an OECD workshop in Tokyo
on invitation of the German Ministry of Economics and Technology.

Other activities involve regular project work, for instance in AGNULA
[5], a project funded in the scope of the 5th framework programme of
the European Commission (IST-2001-34879).

For the 6th framework programme, the FSF Europe issued a
recommendation supported by over 50 parties, in which the advantages
of Free Software for Europe are addressed in how they refer to
accepted European goals; concrete recommendations on how Europe can
capitalise on them are given. [6]

Also the FSF Europe is doing work to support the legal fundament of
Free Software, for instance it helped a local institute for legal
issues of Free Software, the ifross, with the amendment of a German
copyright law revision and recently issued the Fiduciary Licence
Agreement (FLA) [7], which will help upholding the legal
maintainability of Free Software.

Capitalising on Free Software

Free Software offers unique opportunities for Europe as a region and
the European states. In fact Europe is currently the region with the
best position to gain the full advantages of Free Software and go into
the information age with a head-start.

For these to become reality, it becomes increasingly important to make
clear statements and policies in favor of Free Software, such as the
evaluation bonus for Free Software projects defined in the IST work
programme or the policy statement by Liikanen in the European
Parliament [8] regarding Free Software in public administration.

In fact public administration happens to provide an excellent starting
point for the transition towards Free Software for three reasons.

Firstly, a government using proprietary software creates a tendency to
force its citizens to use the same software because of the
aforementioned "viral" effect of proprietary software. As governments
have the ethical obligation to be available to all its citizens, they
can make a just case for Free Software based upon the consideration of
not wanting to force their citizens into a harmful monopoly.

Secondly, public administration is always short of resources, but the
majority of resources spent on IT get squandered by creating a
separate solution for each ministry or region, while the problems
addressed tend to be similar and massive cooperation would be
possible.

And finally, use of Free Software in public administration will
provide a role model, encouraging citizens and businesses to get out
of unhealthy dependencies, getting accustomed to the new model and
becoming economically and socially active in it.

Several European regions already have initiatives to make use of
Free Software mandatory for public administration. The commission
entrusted with this question for the French speaking part of the
region of Brussels came out in favor of such a regulation on February
11th, 2003, for instance.

Public administrations in Europe should at least make sure to prefer
Free Software over proprietary and require open standards for which a
Free Software reference implementation exists.

Also wherever public money is spent, spending it on Free Software is
making sure that it will benefit the public and economy. In the past,
such money was usually spent on proprietary sofware, often benefitting
only that proprietary vendor company directly at the cost of society
and economy as a whole, or getting lost entirely.

For that migration period towards a more sustainable approach,
especially the so-called "Copyleft" licenses — the GNU General Public
License (GPL) being the most widely known — provide a sound basis for
such projects.

These licenses will make sure that the results of resources spent will
be available for all of economy and society equally, fostering a
general increase of economic activity. They will resist having the
results procured by any single company or person trying to restore old
monopolistic situations.

Information Age aware governance

Like information technology permeates all of economy and society,
governance decisions in one area can influence chances in the
information age significantly. Given the European goal of becoming an
information economy, it becomes necessary to be aware of these issues
in all areas of governance.

There are several policies pending or in implementation that are about
to inflict serious harm on the European competitiveness. These should
be prevented or abolished if seeking to increase the European edge.

One policy endangering proprietary and Free Software alike are
software patents. Patents are an entirely unsuitable concept for
software as it has very different properties. Experience indicates the
United States are already paying dearly for their software patent
system with reduced innovation.

To quote Bill Gates from an internal memo: "If people had understood
how patents would be granted when most of today's ideas were invented
and had taken out patents, the industry would be at a complete
standstill today. ... The solution is patenting as much as we can. A
future startup with no patents of its own will be forced to pay
whatever price the giants choose to impose. That price might be
high. Established companies have an interest in excluding future
competitors." [9]

Another extraordinarily harmful law is the European Copyright
Directive (EUCD). Its US counterpart, the Digital Millennium Copyright
Act (DMCA) is already being used successfully by groups such as
Scientology to censor unwelcome web sites. [10] Similar cases can be
expected in Europe.

Economically, the EUCD is highly anti-competitive. As it makes it
illegal to circumvent whatever is considered a protection measure, the
company that created this technical measure is given ultimate control
over who may or may not participate in the market based upon it or how
these companies should behave.

Example is given by the recent case against the teenager Jon Johansen,
in which the question whether buying a DVD in a store will entitle the
customer to view that DVD on their computer has become the central
issue. The EUCD also provides a serious impediment of the freedoms of
speech, communication and choice of profession, giving it a somewhat
anti-democratic air.

These two policies are either in the process of adoption or adopted
already and should be abolished before they can do further harm to
Europes competitive edge.

The current new initiative to reduce competition in the market further
are Palladium and its hardware counterpart proposed by the TCPA. This
initiative, which wishes to be known as increasing the trustworthyness
of computers, is best described as "Treacherous Computing." [11]

Under the pretense of trying to improve computer security, the TCPA
apparently seeks to eliminate concepts and paradigms competing with
the monopoly holders of the proprietary software model. Again, Europe
would be on the losing side.

Resumé

Free Software as a new paradigm offers a stable, lasting and
sustainable approach with higher dynamics and increased
efficiency. The first region to understand and adopt it on a larger
scale is likely to become a leading force in the information age.

Currently it seems unlikely that Free Software will ever replace
proprietary software completely, but by making Free Software the
predominant model, Europe could relieve dependences on foreign
monopolies, which currently create a highly unstable and unfavorable
situation for the European information technologies industry.

Europe is right now in the unique situation of having a large supply
of Free Software competence and growing network of smaller companies
that are based upon or centered in Free Software. Also more of the old
and traditional European IT companies have begun shifting at least
partially towards Free Software.

If this is furthered now, Europe has the potential to become global
leader in the information age.

In case of further questions, the FSF Europe [12] will gladly be of
assistance.